Common U.S. GAAP Issues Facing Accountants, 2nd Edition

Solutions

Chapter 1

Knowledge check solutions

1.  
   1. Incorrect. The Private Company Council (PCC) does not provide FASB with oversight.
   2. Correct. The Financial Accounting Foundation (FAF) provides oversight to FASB.
   3. Incorrect. The Securities and Exchange Commission (SEC) does not provide FASB with oversight.
   4. Incorrect. The Emerging Issues Task Force (EITF) does not provide FASB with oversight.
2.  
   1. Incorrect. The PCC is the primary advisory body to FASB, not the FAF, regarding the proper treatment of private company accounting as it relates to active items on FASB’s technical agenda.
   2. Correct. The PCC is the primary advisory body to FASB regarding the proper treatment of private company accounting as it relates to active items on FASB’s technical agenda.
   3. Incorrect. The PCC is the primary advisory body to FASB, not the EITF, regarding the proper treatment of private company accounting as it relates to active items on FASB’s technical agenda.
   4. Incorrect. The PCC is the primary advisory body to FASB, not the SEC. The SEC has the authority to establish financial accounting and reporting standards for public companies, but has historically relied on FASB to perform that function.
3.  
   1. Incorrect. Only the accounting guidance residing inside FASB ASC is considered authoritative, and other accounting literature residing outside FASB ASC is considered nonauthoritative.
   2. Incorrect. FASB ASC is the single source of authoritative accounting guidance.
   3. Incorrect. FASB ASC has one level of authority, ...